“The DAP Ops RESTORE (Restructure Toll Rates & Equity) Team would like to congratulate the Works Minister for first having declassified most of the highway toll concession agreements, and followed up with the removal of two toll plazas at the New Pantai Expressway (NPE) and the Sungei Besi Highway in the past two weeks.
We call upon the Works Minister to declare the compensation promised to these concessionaires for the abolition of the toll, for if the compensation involved is equivalent to the toll that would have been collected, then the joy for Malaysians will be shortlived.
In addition and more importantly, DAP Ops RESTORE Team calls upon both the Works and Finance Ministers to make the entire North-South Highway and its related concessions such as the ELITE, Butterworth-Kulim (BKE) and the Second Link Highways under PLUS Expressways Berhad completely toll free by 2016.
Following our team's consultations to date with legal experts, investment bankers as well as the general public, we have developed a comprehensive, practicable and creative programme to return the highways to the people at the least possible cost, and shortest possible time without compromising the integrity of the financial markets.
Our proposal will:
1) Impose no further increase in North-South Highway toll rates.
For example, a return KL-Penang journey will remain at RM86.60 today instead of RM115.30 in 2015 and RM168.80 by 2030.
2) Create RM14 billion savings for Malaysians from 2009-2015
This will be the amount saved either (i) by Malaysians using the highway because of no further toll rate increases or (ii) in terms of compensation which would have to be paid by the Government to PLUS Expressways.
3) Continue to collect toll only until 2015
4) Incur no additional cost for the Malaysian Government or Malaysian tax-payers
1) PLUS is listed on Bursa Malaysia at a price of RM2.88 per share and a market capitalisation of RM14.4 billion (24th February).
2) The Government of Malaysia, via Khazanah owns 65% of PLUS.
3) PLUS has outstanding net debt amounting to RM8.5 billion.
We call upon the Government to take the following actions:
1. The Government should make a General Offer (GO) to acquire all minority shareholders of PLUS with a generous 15% premium at RM3.30 per share, costing RM5.25 billion thus ensuring that minority shareholders are protected.
2. The cost of acquisition, added to the RM8.5 billion net debt of PLUS will amount to RM13.75 billion.
3. This cost will be funded by issuing Malaysian Government Securities (MGS) at 3% interest (or less), costing RM413 million per annum. Total repayment will amount to RM16.2 billion over 6 years.
4. At the same time, PLUS should generate at least RM20b in net positive cashflow the 6 years to 2015 without further toll rate hikes and assuming a conservative 3% pa traffic growth.
5. Therefore by 2015, the government can completely repay the MGS and still have RM3.8 billion excess which could be used to build a better public transportation system throughout the country.
Not only will the execution of the above proposal bring joy to all Malaysians with a toll-free North South Expressway, the exercise will fit perfectly with the upcoming “mini-Budget” by the Finance Minister:
- RM14 billion saved by Malaysian consumers will reduce the cost of living for the average Malaysian in times of economic difficulties we face today.
- RM14 billion saved will also redirect expenditure to other more productive sectors of our economy by increasing domestic consumer demand.
- The reduced toll rates and its subsequent abolition will substantially reduce the cost of doing business in Malaysia, increase logistical efficiencies and ultimately make Malaysian companies more globally competitive.
- Best of all, the plan will stimulate demand and make available substantial funds for public infrastructure development without the Government having to increase the precarious budget deficit further.
Keen readers will note the toll-free target is now earlier at 2016 instead of 2020. The main difference between this and the proposal we presented at the public forum is we now assume 3% pa traffic growth, compared to zero before.